Two-Sided Marketplaces Disrupt Traditional Businesses

Uber is famously known for disrupting the transportation industry, challenging taxi services with a new model for transporting people efficiently from place to place.  Airbnb disrupted the hospitality industry, bypassing hotel chains to connect travelers with homeowners with extra capacity for accommodations.  These are just two examples amongst many instances of two-sided marketplaces, where both sides benefit from free market principles that govern supply and demand. 

The Uber Two-Sided Marketplace

On one side of the Uber model are drivers that have a car and a desire to earn money.  On the other side of this marketplace are passengers who need rides.  It’s a simple model, yet very effective.  Connect the two sides together in a marketplace where one seeks the services of the other.  In a free market system, the service should be optimized naturally by the number of drivers and riders.  If there is an oversupply of drivers, the cost to ride should decrease.  If there is a sudden increase in riders, the cost to ride should increase (Uber calls this surge pricing).

The Airbnb Two-Sided Marketplace

In the Airbnb model, the two sides of the marketplace are travelers and homeowners.  Connecting the two together in an efficient platform allows someone that is taking their next vacation or business trip the opportunity to find the perfect stay at an optimized price.  And it allows a homeowner the opportunity to earn revenue for extra capacity that would have otherwise gone unmonetized.  

What Makes These Marketplaces Work

Countless other two-sided marketplaces exist that are successful, such as DoorDash, Grubhub or Instacart.  What makes them work?  The commonality is understanding the motivation of each side of the marketplace and building business rules that allow the free market system to naturally grow.  Marketing and building critical mass are important once it is set up, but it starts with the model.  What does each party expect to receive?  How are these services offered and delivered?  How is the pricing for the service determined?  These are a few of the many questions that are coded into software that ultimately makes a marketplace work.

And sometimes it’s also about timing.  Uber’s timing is no coincidence that it exploded in the smartphone era. GPS functionality in phones allows drivers to quickly locate their passengers. DoorDash, and other food delivery services, have exploded during COVID.

What About Wireless?

Your cell phone has its name from the word cellular, because carriers that provide the service traditionally plan cells as geographic areas that have coverage from a wireless radio tower.  Each cell is designed to be adjacent to another such that there is wireless coverage for your phone or device as you move from place to place.  Over the course of nearly a half century, carriers have built these wireless radio access points and connected them to their core networks by identifying and acquiring sites that allow broad coverage – these are known as macro cells and may cover up to 5 kilometers in distance, or more.

5G is a unique challenge.  The true, ultra-fast 5G uses high frequencies that need cells to be smaller and smaller in coverage for both coverage and capacity reasons, known as micro cells or small cells.  The coverage distance may be a few hundred meters up to one kilometer or so.  Thus, many of these small cells are needed over the next few years for carriers to complete their ultra-fast Gigabit speed networks.  In 2021, new small cell hardware and mesh protocols are expected to make them even easier to deploy. 

What about a two-sided marketplace applied to the wireless industry?  A two-sided network?  The timing is perfect.  Carriers obviously have the motivation to deploy their radio access points in as many places as possible to obtain ideal coverage.  As Airbnb learned, there’s a lot of home and business owners that have capacity and a desire to earn extra money.  A good marketplace for the wireless industry would build the right business rules to allow both sides to benefit.  Carriers to get the ideal coverage at the optimal cost.  Owners to get additional money and fast Internet for installing and operating small cell radios.  The rules that govern supply and demand for wireless radio access points have been coded into Airwaive’s patent-pending platform – designed to accelerate the deployment of 5G networks.  We’re excited to show it to you in 2021.

Airwaive

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